Wednesday, March 08, 2006

SAT 3-8-6 EDITORIAL >> Ruling goes against TIF

Circuit Judge Kim Smith deserves the state’s thanks for striking down a scheme to divert school taxes for downtown business development in Fayetteville. Judge Smith ruled in the only way that the law really permitted but that big development interests refuse to acknowledge.

He said that 25 mills of state-levied property taxes for the schools could not be used to fund a tax-increment-finance district.But the judge’s ruling was so narrow that it does not afford Arkansas school children the protection they deserve. Let us hope that the Arkansas Supreme Court gives them that protection.

A constitutional amendment permitting the creation of tax-increment districts would allow local governments to take away the growth from school millage and other local ad-valorem taxes and turn it over to commercial development projects. Few voters in Arkansas understood the implications of the amendment, which was characterized in wholly different ways during the election.

Everyone should understand that neither the Fayetteville project or any other, whether it is at Rogers, Jonesboro or North Little Rock, is simply a local concern. The taxes come from every school district in Arkansas. Some of your school taxes would go to the Fayetteville project, although you would have no say about it.

Judge Smith ruled that the growth in tax receipts from the schools’ 25 mills could not be used in the Fayetteville project, but the legislature amended the law after that project was proposed. Developers can argue that the judge’s reasoning does not apply to projects proposed since the 2005 changes in the law.

We think they are mistaken about the law. Taxes that were levied by the voters for school purposes should never be diverted to other purposes. The prevailing law at the time all local school taxes were levied said the receipts could never be used for any other purpose. We believe the Supreme Court will so rule when the proper case reaches it. If we’re wrong, the schools and children are in far greater jeopardy than any of us imagined.